What is the target cost of the product

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Q1) The market price for the product has been $ 50 per unit, but competitive pressures have reduced the market price to $ 45. The firm manufactures 10,000 of these products per year at a manufacturing cost of $ 38 per unit (including $ 22 fixed cost and $ 16 variable cost per unit). Other selling and administrative costs for the product are $ 8 per unit. What is the firm's target manufacturing cost for this product if the profit per unit is to remain unchanged?

Q2) Comdex Inc. manufactures parts for the telecom industry. One of its products that currently sells for $160 is now facing a new competitor that offers the same product for 140$. The parts currently cost comdex $130. Comdex believes it must reduce its price to $140 to remain competitive, What is the target cost of the product if comdex desired a 25% profit on sales dollars?

Reference no: EM132655979

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